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IRS Issues Final Regs on Disclosing Return Information to Whistleblowers

On
March 14, the IRS released final regulations regarding
disclosure of return information by the Treasury Department in
connection with written contracts among the IRS,
whistleblowers and, if applicable, their legal representatives
(T.D. 9516).

The new IRS Whistleblower Office may
determine during the course of an investigation that it needs
the assistance of a whistleblower or the whistleblower’s legal
representative and may determine that it has to disclose
returns or return information in order for the whistleblower
to be able to render assistance. Such disclosures are
authorized for tax administration purposes by Sec. 6103(n).

The final regulations issued in T.D. 9516 describe the
circumstances under which officers and employees of the
Treasury Department may disclose return information to
whistleblowers and, if applicable, their legal
representatives, in connection with written contracts for
services relating to the detection of violations of the
internal revenue laws or related statutes.

The
regulations specify that disclosures “shall be made only to
the extent the IRS deems it necessary in connection with the
reasonable or proper performance of the contract.” However,
the regulations also say that “[d]isclosures may include, but
are not limited to, disclosures to accomplish properly any
purpose or activity of the nature described in section
6103(k)(6) and the regulations thereunder.” Sec. 6103(k)(6)
authorizes disclosures for investigative purposes.

The
regulations forbid the whistleblower from further disclosing
or otherwise using the disclosed return information and
subject them to civil and criminal penalties. The regulations
also require whistleblowers to comply with any other
safeguards the IRS may prescribe.

The final regulations
are effective upon their publication in the Federal
Register.

State audits of abandoned and unclaimed property (AUP) have exploded in recent years. This report outlines the escheat process, common types of AUP, how different states are handling it and how companies can plan for potential audits and liabilities.

Don’t get lost in the fog of legislative changes, developing tax issues, and newly evolving tax planning strategies. Tax Section membership will help you stay up to date and make your practice more efficient.